The euro traded at $1.16, near its weakest level since early April, as investors weighed mixed economic data and monitored US-Iran negotiations. German consumer sentiment improved heading into June, defying expectations of a further decline, driven by a rebound in income expectations. Business confidence also edged higher in May, recovering from April’s six-year low, while a separate report confirmed 0.3% GDP growth in Q1 2026. However, Thursday’s PMI revealed the euro area economy unexpectedly contracted in May at the fastest pace since late 2023, amid a war-driven surge in living costs. S&P Global warned the data points to inflation nearing 4% in the coming months. Money markets are pricing in at least two ECB rate hikes before year-end. Meanwhile, investors grew more optimistic about progress in US-Iran peace negotiations after US Senator Marco Rubio noted "some good signs" in Iran talks, though Tehran’s uranium stockpile and control over the Strait of Hormuz remain key obstacles.